As he does most mornings, Donald Trump took to Twitter on Wednesday, this time to take credit for the rally in U.S. equities since the election.

President Trump said the U.S. stock market has increased by US$5.2 trillion in value since voting day on November 8, marking a 25 per cent gain. But as usual, his claims warrant a little fact checking.

“It would be really nice if the Fake News Media would report the virtually unprecedented stock market growth since the election,” Trump tweeted.

Derek Holt, head of capital markets economics at Scotiabank, provided some context, noting that while U.S. stock market capitalization is up approximately 19 per cent, global equity market capitalization has risen 33 per cent.

As for Trump’s US$5.2 trillion figure, it’s a bit high, with Holt noting that aggregate U.S. stock market capitalization is up US$4.4 trillion (in U.S. dollar terms) since the election. The world’s equity market cap is up US$21.8 trillion.

Removing the U.S. from the equation, the rest of the world’s market cap has climbed 41.6 per cent in the post-election period, or roughly US$17.2 trillion.

In other words, “the U.S. market is dragging the rest of the world index lower,” Holt told clients.

Factoring in movements in the U.S. dollar since the election, the economist noted that U.S. stocks have underperformed the rest of the world by a substantial margin. That trend may gain more momentum if the Trump administration is unable to push through tax reforms that already appear to be priced into the market.

The President has promised that stock performance “will grow by leaps and bounds” if tax reforms are passed, yet U.S. equity valuations are already essentially at an all-time high based on the Shiller 10-year P/E Ratio, with only 1929 and the dot-com era being higher.

Holt laid out some scenarios whereby U.S. stock performance could have been better on a relative basis: If the Federal Reserve wasn’t the only major central bank to have made meaningful rate hikes, or if global investors were less concerned about isolationist policies from the Trump administration, along with failures in Congress and the elevation of various geopolitical risks.

“Perhaps 2018 will bring more rotation away from outperformance across other global equity markets,” Holt said. “Any way you cut it, any equity portfolio manager worth his or her salt would view relative market performances as being about myriad influences.”

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